A tweet from Donald Trump puts a stop to the rise of oil. The US president, through his favorite social network, announced that he had spoken with the Saudi king Salman, receiving reassurances that Riyadh will increase crude oil production in order to compensate for the decrease in production by Iran and Venezuela.
Last week's ride seems to have momentarily stopped: contracts on wtf for delivery in August, dropped today to $73,69 a barrel, down 0%. Down also the Brent, settled at 78,31 dollars a barrel (-1,16%) after having almost touched 80 dollars in the previous sessions.
“I just spoke with Saudi King Salman and asked him that, due to the turbulence and dysfunction in Iran and Venezuela, Saudi Arabia should increase oil production, at least up to two million barrels a day, to compensate for the difference…the prices are too high! He agrees."
Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & dysfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high ! He has agreed!
- Donald J. Trump (@ realDonaldTrump) 30 June 2018
Words that, as expected, have caused a jolt in the market, all the more if we take into account that the OPEC summit held on June 22 in Vienna has established raising output, giving the green light to increases by only 1 million barrels. An increase which, however, does not seem to have been sufficient, pushing the price of oil to its highest level since November 2014. The WTI, in particular, exceeded 74 dollars a barrel, rising by 8 percent in just one week.
Investors fear at this point that the three largest oil-producing countries in the world, vizand the United States, Russia and Saudi Arabia, reach an agreement which provides for a further increase in production in order to bring down the price of black gold, to the detriment of other producers such as Iran and Venezuela which depend much more on this source.
It should be emphasized that, in the same context, Libya has planned to close two more ports from which it exports crude oil: from Monday the embarkations of Zouetina and al-Hariga in the east of the country have also been closed after the closure of the terminals of al-Sedra and Ras Lanouf. This further closure will cause losses of 850 barrels of crude oil.
The CEO of Eni also spoke on the matter today, 2 July, Claudio Descalzi, according to which with the expected increase in production by OPEC and non-OPEC countries, the price of the barrel will be able to stabilize around 65-70 dollars, a level considered adequate, because increases that are too significant could discourage consumption: “In my opinion – declared Descalzi – 70 dollars is a little above the price that can be good for both the producer and the consumer. It is clear that those who invest must have an idea of the continuity of the price", he said, underlining that "at the moment the forecast is for growth, but that is not certain, because it depends on how much Saudi Arabia and Russia will be able to play on spare capacity (i.e. stocks)".
“It is clear – continued Eni's number one – that if they were able to respect the one million barrels more per day they promised (the increase foreseen on the basis of the latest OPEC agreement on the increase in production), which is then been raised to 600.000 barrels, the price could stabilize around 65-70 dollars, if this is not done, it will mean that there will be a slightly higher stabilization, which could be 75-80 dollars". Finally, Descalzi underlined that “the high price scares even those who produce, because it brings down consumption and leads to a condition of overcapacity. Now the stocks are quite balanced, in fact they have gone below the average of the last five years, so every geopolitical stimulus immediately creates price increases, and there are many geopolitical stimuli”.
